Friday 29 Mar 2024
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KUALA LUMPUR (Jan 20): UMW Holdings Bhd jumped 6.06% this morning after Hong Leong IB Research has upgraded UMW to “Buy”with a higher target price of RM5.60 (from RM4) after UMW had proposed to distribute its shareholding of 55.73% in UMW-Oil & Gas Corp Bhd to UMW shareholders (expected to complete by April 2017).

At 9.07am, UMW rose 28 sen to RM4.90 with 446,900 shares traded.

In a note today, the research house said the exercise is in line with UMW’s plan to exit O&G industry.

HLIB Research said UMW will be fully focused on managing its growth and risks related solely to its automotive, equipment, manufacturing and engineering segments.

“We believe the exercise is attractive and value accretive to existing shareholder of UMW:

“Option to realize one off cash dividend of up to 67sen/share (based on HLIB UMW-OG target share price of 65sen), equivalent to 14.5% dividend yield.

“Invest in UMW, without exposure towards UMW-OG. Deconsolidation of UMWOG (loss making and high gearing), which will improve earnings and balance sheet of UMW,”it said.

“Upgrade to Buy with higher Target Price of RM5.60 (from RM4.00) based on targeted dividend yield of 12%. However, we note that share price may consolidate post completion of exercise by April 2017,”it said.

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